Kashmir Economic Review

Banks Soundness in Pakistan: SEM-PLS Approach

Ahsan ul Haq Satti — 2023-03-29

The research is conducted to test the soundness of 20 listed Pakistani banks post-crisis (2009-2018). The banks included Islamic, private, and publicly-owned banks. PLS-SEM technique was applied on CAMELS with 42 indicators, and the most significant parameter for Banks' soundness was identified. Stock Returns were taken as the dependent variable and direct indicator for Bank's soundness. Outcomes showed that Earning parameter contributed most significantly to Banks' soundness in Pakistan. Other parameters like management, capital, and liquidity were also significant, but results showed that banks are executing with a lower capital base and less liquidity, and management also needs improvement. The sensitivity parameter showed no relevance to banks' soundness in Pakistan. Overall, the Pakistani banking industry is sound, and worldwide banking crises affect Pakistani banks considerably.

Exploring the Historical Development of Kashmiri Shawl Industry and Future Prospects of the Industry

Sobia Hafeez Kiani — 2023-03-29

Throughout history, the shawl industry has been one of the most important industries in Jammu and Kashmir. It is not only culturally significant but has also been a major source of exports and employment. It is well-established and recognized that the shawl industry is declining, which has aggravated in recent years. This study aimed to explore the importance of foreign trade for the development of the shawl industry, the reasons behind the decline, and its future prospect. For this study, to understand the prospects of the industry, exports data from 1995- 2017 was forecasted using ARIMA for the next 10 years. Using trade statistics, the present study has demonstrated that foreign trade has historically played a vital role in the development of the shawl industry, and its decline is rooted in the conflict and low investment spiral, which decreases its productivity and hence its competitiveness. Moreover, the study has also shown that the industry's prospects are negative, as shown by the point forecast decline. Future studies are needed to explore the relationship between the growth of the shawl industry and NSDP or employment rate in Kashmir, which can provide key insights for understanding the economy of Kashmir.

Determinants of Health-Seeking Behaviour in Pakistan

Tanweer ul Islam — 2023-03-28

Considering the low performance of Pakistan on health indices in the region, its fast-growing population, and higher poverty levels, this study aims to highlight the practical relevance of Grossman’s health investment model by analyzing the health demand in Pakistan. To avoid the problem of endogeneity due to the interdependence of health capital and demand for medical care, we used the binary dependent variable. Logistic regression is employed to estimate the empirical model using microdata from Pakistan’s Social & Household Integrated Economic Survey (2018-19). Results indicate that individuals with better income, education, and social respect demand more healthcare as they value a healthy lifetime high. Due to the higher cumulative risk of illness, females’ health demand is higher than males. While individuals engaging in sports and recreational activities care about their anticipated future health outcomes and hence demand more healthcare. Finally, the regional control variables show that people seek fewer healthcare services in rural areas and Balochistan province due to financial constraints, lack of healthcare facilities, and transport issues.

Modeling Volatility Spillover and Role of Volatility Spillover Effect to Improve Forecasting Performance of GARCH Models Based on Varying Distributions

Hifsa Mobeen — 2023-03-28

The presented study endeavor to examine whether financial returns’ volatility spillover effect imparts a role to improve the forecasting accuracy of GARCH family models based on various error distributions. An empirical investigation is conducted by employing standard GARCH, EGARCH, and GJR-GARCH models. Three error distributions, normal, Student t, and General Error Distribution are used in the analysis. Daily data spanning from August 4, 1997, to April 28, 2022, has been analyzed. The strength of the study lies in utilizing the volatility spillover effect along with none normal error distributions to improve the forecasting accuracy of three GARCH family models for stock and currency markets’ returns, in the context of Pakistan. In-sample estimation results from all three models validate the existence of significant volatility spillover among the stock and currency markets of Pakistan. Whereas, out-sample forecasting results provide evidence regarding accuracy gain from the perspective of stock and currency markets’ returns forecasting. Along with the volatility spillover effect, EGARCH and GJR-GARCH models based on Students t and GED distributions provide better forecasts for stock market and currency market returns. The results of the study hold promise for practical significance for asset allocation and financial risk management applications.

Contemporary Non-Tariff Measures Under the WTO Regime: Case of Pakistan Export to European Countries

Amir Mustafa — 2023-03-28

The World Trade Organisation (WTO) initiated a uniform set of non-tariff measures in 1995, which are now considered as emerging barriers in world trade patterns. The non-tariff measures impede the export of WTO member states. The WTO has asked its members to limit tariff rates. Hence, members have left with only option to levy non-tariff barriers to transform exports. This article's main objective is to examine the effects of non-tariff measures on export of Pakistan to European countries from 1995 to 2018. Poisson Pseudo Maximum Likelihood (PPML) and Zero-inflated PPML (ZI-PPML) estimation methods are deployed to address zero-export in many years and over-dispersion data of export to specified countries, based on the gravity model. The findings show that the GDP of Pakistan and European nations, tariff, distance, and Non-tariff Measures (NTMs) are core determinants, while in some cases, NTMs initiated are export restrictive. In this perspective, tariff, and non-tariff measures are utilized to administer Pakistan's export to the subject region. Similar to the developed countries, Pakistan should also address non-tariff barriers effectively for favourable trade flows.

Banks Efficiency Analyses in Dual Banking System

Muhammad Iqbal — 2023-03-28

The share of Islamic banks is growing in the banking sector steadily. An increasing number of conventional banks are introducing Islamic banking services. We estimate the efficiencies of banks by applying Data Envelopment Analysis (DEA) and for bias correction, we apply the double bootstrap method. In the second stage, determinants of efficiency are analyzed. Annual data from the reports of the banks is employed for the analysis Conventional banks providing Islamic banking services are found to be performing better in terms of technical efficiency than pure Islamic and pure conventional banks. In the financial crisis period, there is no evidence of a difference in the performance of banks across all groups.

Federal Tax Revenue Forecasting of Pakistan: Alternative Approaches

Syeda Um Ul Baneen — 2023-03-28

This study is an appraisal of FBR's existing tax revenue forecasting technique, i.e., the buoyancy approach. It compares the effectiveness of the buoyancy approach and alternative forecasting methods. Using 1984-85 to 2018-19 annual data, predictions are made using different theoretical, statistical, and machine learning methods. The root mean square error (RMSE) suggests that the Least Absolute Shrinkage and Selection Operator (LASSO) and Elastic Net approaches provide better forecasts for total tax and federal excise duty. The Box Jenkins methodology provides the most accurate direct and sales tax estimates, while custom duties are best predicted through the Vector Autoregressive model. On the other hand, mean absolute error (MAE) recommends Marginal Tax Rate (MTR) to forecast all federal taxes of Pakistan. In comparison, the buoyancy approach predictions are not accurate for any of the federal taxes.

Evaluation of Energy Cleanability Gap and its Impact on Sustainable Economic Development

Muhammad Jaeved Akhtar — 2023-03-28

The transition from traditional to sustainable energy is nothing without easy access to clean energy. Therefore, different economies have made smooth transitions, but still, there is a gap in energy cleanability. Here, this study adopted two stage-analyses; initially, it presents an overlook of energy cleanability transition by applying Technique for Order Preference by Similarity to an Ideal Solution (TOPSIS) with entropy weightage in low-middle & upper middle-income countries. The fallout of TOPSIS discloses the outcomes and finds more divergence trends in lower-middle-income countries. Furthermore, the current study examined the impact of the energy cleanability gap on economic development in selected panels from 2000 to 2019. Then, unclean energy is to blame for the declining trend in economic development. Furthermore, sustainability in the energy transition is more required as it has its costs and benefits and needs more government commitment and regulatory changes. So, avoiding such vulnerabilities requires massive financing to tackle them and improve flexibility in economic development.

Impact of Energy Price on Technological Innovation through the channel of Human capital: The Case of Developed and Developing Economies

Isma Sadaf — 2023-03-29

This Study investigated the moderating role of human capital in the relationship between energy price and technological innovation for 81 developed and developing countries from the period 1990-2019. For empirical investigation, we have employed fixed effect, random effect, and generalized method of moments (GMM). This study analyzed the conditional effect of energy price on technological innovation at different levels of human capital. According to findings, both developed and developing countries experience an increase in technological innovation when energy prices are high. The moderating role of human capital, confirms that energy price and human capital are substitutes in explaining the relationship with technological innovation. It is proposed for policy implications that financial support is required to increase technological innovation because it is an expensive investment to pursue. Furthermore, to build the absorptive capacity of the country, which in turn increases factor productivity, nations need to develop their human capital.

Probing the Nexus Between Innovative Work Behavior and Religious Belief: One Belt and One Road Perspective

Wasim Abbas — 2023-03-29

The study aims to analyze the impact of organizational justice on innovative work behavior in the services sector. It capitalizes on the role of perceived organizational support as moderator and Muslim religious belief in three-way moderation. One of the principal objectives of the study is to find whether perceived organizational support and Muslim religious belief combined foster innovativeness. This study surveys 582 respondents randomly and utilizes PROCESS macro in SPSS to test hypotheses. The study reveals that perceived organizational support and Muslim religious belief distinctively play a vital role in the relation between organizational justice and innovative work behavior. The study concludes by presenting managerial and economic implications and paves for further research on various promising areas.

Power of Social Media: Journey of Females Towards Entrepreneurship

Sadia Abdullah — 2023-03-29

Treading on a business venture as an entrepreneur is a daunting task in a developing economy like Pakistan, especially if you do not belong to the globally dominant gender in the markets. Social media is encouraging people to try their luck with entrepreneurship as self-employed, be it a micro-entrepreneur or a partnership having limited investment. The study aims to explore the nature of home-based female-owned online businesses and to identify areas where the government can play a role in facilitating and encouraging online female entrepreneurs. The study employed a qualitative research design, in the locale of the capital, Islamabad. Structured interviews were conducted with 18 female entrepreneurs running home-based online businesses. Thematic analysis was used to reach the results. Social media is effectively playing its role in transforming the lives of females since Covid-19 hit the world. Such type of business requires the least level of education and investment, creating ease of doing business by providing a free-of-cost platform to become an entrepreneur without requiring to leave the house for the sake of business. Moreover, half of the sample resented the negative impact of government decisions on their business operations and identified the need for an online fraud filing portal and other facilitations.

Trade Liberalization Policy Effect on Inequality and Poverty: A Developing Economy Case in Point

Ghulam Moeen ud Din — 2023-03-29

This study has employed Social Accounting Matrix (SAM)
2010-11 for the economy of Pakistan designed by Dorosh et al.
(2015) to analyze the effects of trade liberalization on income
inequality and poverty. Two experiments have been conducted
to investigate the effects using the Computable General
Equilibrium (CGE) Model. By applying a restricted trade policy
(50% tariff) and free trade policy (0% tariff), the results have
been concluded, which depicts that overall, the trade
liberalization policy has positive effects on the economy of
Pakistan. Exports, Household income, Consumption, and GDP
have increasing trends. The simulations have a minor effect on
income inequality. Poverty reduction has also been noticed.
Consumption of a few commodities has declining trends.
Fluctuations in savings, decrease in investment, and increase in
imports are the defects of the trade liberalization policy. In the
case of developing countries like Pakistan, this policy strongly
affects the achieving reduction in income inequality as well as
reducing poverty along with desired capital formation and
remittances from abroad for economic growth in the long run.

Agriculture Technology Adoption Determinants: Panel Data Analysis

Muhammad Ali — 2022-03-20

The agriculture sector of Pakistan has a key role in the economy
because it has a major share in the country’s GDP. Faisalabad
district has also an important role in the agriculture sector and
most traditional methods are used in the district. The new and
improved methods are being introduced in the province. The
current study investigates the sources and determinants of
improved agriculture technologies in the district by using
primary panel (2006-07 & 2018-19). The logistic approach is
used to determine influencing factors in both periods separately
with marginal effects. The major factors responsible for
agriculture technology adoption are the age of the farmer's head,
family size, farmer education, higher education of family
members, household member employment, livestock ownership,
number of visits to agriculture extension officers, and media
access.

Consumption Pattern of Male and Female Headed Households: Evidence for Pakistan

Malik Muhammad — 2022-03-20

This paper aims to investigate the consumption patterns of male
and female-headed households in Pakistan. According to the
findings, both types of households spend about half of their total
expenditure on food and drinks. Furthermore, compared to their
male counterparts, female-headed households spend a higher
percentage of their income on education and healthcare. On the
other hand, male-headed households spend a larger share of their
expenditure on food and drinks and entertainment than femaleheaded households. The budget shares for food and drinks, fuel
and lightning, and clothing and footwear decline, while that of
education, durables, healthcare, and entertainment rise with the
increase in total expenditures in case of both types of households.
The aged heads are found to be more diet and health-conscious;
and thereby, with the increase in age, the expenditures on food
and drinks, healthcare and education increase. Results also reveal
that with the increase in the dependency ratio, the budget share
increases more on food items than non-food items. Finally, with
a higher level of education, the budget shares of education,
entertainment, durables, healthcare, and fuel and lightning
increase.

Interest Rate, Exchange Rate, Terms of Trade and Current Account Dynamics: Empirical Evidence from Pakistan

Tahir Mukhtar — 2022-03-20

Since the early 1980s, the intertemporal approach to the current
account (ICA) has acquired much attention and has become a
standard instrument for determining the current account
situation. The current study analyzes the ICA’s consistency and
relevance for Pakistan. To achieve this goal, we employ the
present value model of the current account for the period 1960 to
2016. The empirical findings highlight the statistical consistency
of the prediction of the intertemporal model in Pakistan.
Furthermore, when supplemented with external sector variables
such as the stochastic global interest rate, real exchange rate, and
terms of trade, the present value model does a reasonable job of
illuminating Pakistan’s historical current account movements.

Nexus Between Unemployment and the Size of the Informal Economy in the Case of Pakistan and its Comparison with the Subcontinent

Ashiq Hussain — 2022-03-20

Despite the government's efforts to reduce the shadow economy
in Pakistan to raise revenue, workers' involvement in the shadow
economy continues to rise, explained via the labour force
participation in the shadow economy. The debate regarding the
estimation of the shadow economy and its relation to
unemployment is highly celebrated in literature. It is not hard to
find a few studies while taking Pakistan a particular case that
explains the relationship between Unemployment and the size of
the Informal Economy, but no study channelizes properly how
and through which channels unemployment affects the size of
the informal sector. Additionally, this study contributes to filling
this void by demonstrating how unemployment is linked to the
size of the shadow economy and how unemployment fuels the
informal economy's growth in Pakistan. Further, it provides
possible economic consequences for public policy decisions.
The study posits that changes in the unemployment rate
positively contribute to the size of the shadow economy. Due to
the unavailability of legal opportunities, workers who work in
the shadow economy continue to stay, while other unemployed
labor force also tends to participate in informal economic
activities.

Impact of Macroeconomic Instability on Private Investment: Evidence from Pakistan

Babar Hussain — 2022-03-20

This paper investigates the effects of macroeconomic
instability on private investment. Contrary to the existing
studies about Pakistan, which use a single variable as a proxy
for macroeconomic instability, we contributed by
constructing a Macroeconomic Instability Index (MII)
consisting of six variables. The study uses time-series data
from 1976 to 2013 and applies the Autoregressive Distributed
Lag (ARDL) technique. The empirical findings show an
inverse relationship between macroeconomic instability and
private investment. This warrants that policymakers should
minimize macroeconomic instability as for as possible.

Does Exchange Rate Volatility Matter for the Effect of Financial Liberalization on the Composition of Capital?

Anwar Mughees Alam — 2022-03-20

This paper aims to investigate the impact of financial
liberalization on the composition of capital through the channel
of exchange rate volatility. It uses the panel data of 105
developed and developing countries for 1976-2017 and employs
the seemingly unrelated regression method for unbalanced panel
data developed by Biorn (2004). The paper concludes that both
de jure and de facto measures of financial liberalization have a
significant direct positive impact on the composition of capital.
In contrast, the indirect effect through exchange rate volatility
hampers the quality of capital. However, the net effect confirms
that the overall impact of financial liberalization on the
composition of capital through exchange rate volatility improves
the quality of capital stock because of the catalyst role of
financial liberalization, as it absorbs the adverse effects of
exchange rate volatility. These findings will help policymakers
formulate policies to stabilize the exchange rate market after
financial liberalization to promote investment, improve capital
quality, and economic prosperity.

Effect of Foreign Assistance on the Economic Growth of Recipient Countries of Asia

Saira un Nisa — 2021-09-07

This study examines how foreign aid affects the economic growth of developing countries in Asia. The data is collected from 1984 to 2013 from nine developing Asian countries. It is experienced that foreign aid and its influence on economic growth demonstrate significant ambiguity about the sign and magnitude. This study accentuated the policy role and the role of political stability for foreign assistance on countries' economic growth. This work establishes foreign aid contributes to growth through good governance, employing ?xed effect in a static-panel context. It also supports the evidence of a negative relationship between foreign aid and economic growth. The ?nding suggest noticeably that foreign aid is growth-enhancing if there is a better policy situation along with political stability.

An Analysis of Women Employment Status in Household Decision Making: Empirical Evidence from Pakistan

Waqqas Qayyum — 2021-09-07

The study aims at empirically examining the role of women's employment status towards their capability in household decision-making. Generally, it is believed that employment status creates a sense of empowerment and allows women to be more proactive and influential in their household affairs. The study objectively explores this aspect through a survey of employed and unemployed women from Punjab province (Pakistan). A multidimensional index has been constructed to evaluate women's involvement in household decision-making. Utilizing a “Generalized Ordinal Logit Model”, the study finds that employed women hold a dominant position in their household decision making as compared to their unemployed counterparts. The proportional odd of higher participation in household decisions is found significantly higher in employed women as compared to unemployed women. Additionally, the study proclaims the income level of employed women, their marital status, their education, and the educational level of their fathers as significant in the deterministic framework of women's household participation.

Household Catastrophic Health Expenditures and its Determinants in Pakistan

Syeda Anam Fatima Rizvi — 2021-09-07

Pakistan being a lower-middle-income country, is always being able to allocate less than or around 2% of GDP to health due to which Out-of-Pocket payments have a very large share in Pakistan’s total health financing. Hence, when this OOP health expenditure exceeds a defined threshold of the Household’s Non-food consumption expenditure then the Household faces financial catastrophe. This research sheds light on the features that can make households in Pakistan more vulnerable to catastrophic health expenses and fills the gap by analyzing the determinants of Catastrophic health expenditures of Pakistan and discusses the incidence and intensity of these Catastrophic health expenditures. We have used survey data of Household Integrated Economic Survey (HIES) of Pakistan for the year 2015-2016 for 24238 households. It contains household information including education, income, consumption expenditure, and health expenditures. As anticipated, some determining factors significantly increase the risk of facing catastrophic health expenditures.

Regional Earning Differentials in Pakistan: Does Age Makes a Difference?

Zopash Khan — 2021-09-07

To investigate regional earning differentials in Pakistan, Data has been taken from Pakistan Social and Living Standard Measurement. Analysis has been carried out for all, young and old earners. Earning differences are decomposed by using the Oaxaca decomposition technique. Results indicate that old earners face less discrimination as compared to young earners in rural areas. Income differences of 31.6% for all earners, 34.6% for young earners, and 21.5% for old earners are due to regional (urban and rural) factors, which indicates discrimination towards rural workers. Overall, urban workers earn 27% more than rural workers. The impact of education on earnings is higher for urban workers than for rural workers in the case of all earners. The impact of the relatively lower level of education on wages is more in rural areas than in urban areas for young earners. As young earners receive higher education i.e. above graduation, the impact of education is more on earnings if worker resides in an urban area. Furthermore, the impact of the lowest level of education on the earning of workers is more in rural areas than in urban areas for old earners, but as education increases impact is stronger for old earners in urban areas. Based on the results, few policy implications have been discussed.

Monetary Policy Shock and Inflation Persistence: The Case Study of Pakistan

Sania Anwar — 2021-09-07

Inflation persistence has been a major stress for economies during the past few decades. Inflation is a monetary phenomenon and the persistence of inflation has broadly attracted the attention of economists all over the world. Inflation persistence shows the degree to which future values of inflation are associated with bygone shocks or, in other words, the speed of adjustment toward its long-run value. Indeed, inflation dynamics and the degree of inflation persistence have been recognized as the most essential parameters for affecting monetary policy’s performance. This study estimates the degree of inflation persistence and other macro-economic variables (under a multivariate Approach). Secondly, this study allows the long memory property of inflation persistence to examine the effect of monetary policy shocks on Pakistan’s economy. Knowing the degree of inflation, offers vital information, to the central bank, about how to manage the interest rate to attain the targeted rate of inflation. The study employed Structural Fractional Integrated Vector Auto-regressive Model for the monthly data of 2004:07-2019:12. The parametric method is used for the estimation of fractional integration parameters. The result of the study suggests that there is a high but mean-reverting behavior of inflation persistence in Pakistan. Its means that monetary policy shock will affect inflation for a longer period and dissipate slower than it is under the assumption of stationarity. The results show the positive and significant impact of monetary policy shocks on inflation persistence.

Regional integration and services exports: A comparative analysis of growth, performance, and competitive advantage for ECO region

Khadim Hussain — 2021-03-10

This study intends to perform the comparative analysis of
growth, performance, and competitive advantage of services
exports of Pakistan regarding ECO (Economic Cooperation
Organization) countries. There hardly exists any such study. To
examine the growth and performance of services exports in ECO
countries this study relies on descriptive statistics while the
competitive advantage of Pakistan regarding other ECO
countries is analyzed using well recognized Balassa index.
Results of the study show that although the share of ECO in
world services exports is comparatively small than other regional
trading blocs however, it is consistently on the rise. And
Balassa’s index shows that Pakistan has managed to maintain
and develop exports of royalties and license fees services and
computer and information services over the years. To exploit its
RCA (Revealed Comparative Advantage) in computer and
information services, this study suggests Pakistan should spend
on the education and training of its youth to enhance its human
capital.

Money Demand Function in Ghana: Does Stock Prices Matter?

Mutawakil Abdul-Rahman — 2021-03-10

This study aims to investigate the impact of stock prices on
money demand in Ghana. Quarterly data is utilized between
1999Q:1 and 2017Q:4, where the broad monetary aggregate
(M2) is the dependent variable and the independent variables
included real income, short-term interest rate, real effective
exchange rate, and real stock prices. The study employed
Autoregressive Distributed Lag (ARDL) and bounds
cointegration techniques. The bounds test outcome indicated the
existence of a long-run equilibrium relationship between M2,
real income, short-term interest rate, real effective exchange rate,
and real stock prices. The results show that real income and real
stock prices affect real M2 demand positively and significantly
in both the short-run and long-run. Hence, the wealth effect is
dominant for the Ghanaian economy. Further, the study recorded
a negative influence of short-term interest rate and real effective
exchange rate on M2 demand but only the former affects M2
demand significantly in the short-run and long-run. The
important policy implication derived from the results is that, if
the Bank of Ghana can prevent downturns and volatility of the
stock market, a sound monetary targeting could be achieved.

Investigating the Impact of Fiscal Decentralisation on Health Sector: A Case of Pakistan

Iftikhar Ahmad — 2021-03-10

An important determinant of improved quality of life is the
health sector. Pakistan, being a developing country, lags on
various health indicators and therefore, this study discusses the
health sector in Pakistan. As the health sector is a devolved
subject, therefore, the study explores the impact of fiscal
decentralization on important health sector indicators. National
data ranging from 1974-2009 was used to analyse the important
health indicators in Pakistan. Analysis indicates that the health
sector remained neglected over the period. To a surprise, a
negative long-run cointegrating relationship was found for
federal transfers on health expenditures at the national level.
Hence, provincial autonomy during the period of analysis could
not bring the desired improvement in the health sector.
Nevertheless, the study highlights that federal transfers to
provinces do have social implications.

A Time Series Analysis of Financial Sector Development of Pakistan

Abdul Jalil — 2021-03-10

This article empirically investigates the contributing factors of
Pakistan's financial sector by using time series data from 1973 to
2019. Several studies discuss the role of financial development
in explaining economic activities, but the literature on the
determinants of financial sector development is an infant in
Pakistan. This study is an attempt in this way. Therefore, we
allow structural breaks endogenously to avoid spurious
relationships among the variables. Notably, we use unit root tests
which allow multiple breaks. This test confirms that some of the
data series have different levels of integration. We find that trade
openness, capital account liberalization, investment, GDP per
capita, and remittances are essential variables to make the
financial sector a well-functioning system. Inflation, tight
monetary policy, and public debt may hurt Pakistan's financial
sector.

Modelling Dynamics of Sen’s Capability Dimensions: A New Approach

Hamid Hasan — 2021-03-10

Sen (1999) introduced dynamics into the capability approach in his book “Development as Freedom”. There has been hardly any
work, except for Pugno (2017), on capability dynamics since
then. The study of Pugno (2017) is theoretical and does not
derive policy implications in terms of freedom, functioning, and
conversion efficiency. The lack of empirical work in this area is
largely due to the unavailability of panel data at the household or
individual level to study dynamics. To solve this problem, we
have developed a methodology based on bootstrapping to study
the dynamics of data available at a point in time. We then apply
this methodology to explore the dynamics of capability
dimensions in various policy scenarios using district-level data
from the Pakistan Socio-Economic Survey (PSES, 2002). First,
we measure sense-of-achievement, sense-of-freedom-toachieve, and sense-of-ability-to-achieve to quantify Sen’s
functioning, freedom, and conversion efficiency for the overall
functioning of “being achieved”. Most districts (61.4%) are
found to fall in the policy region where it is required to focus on
freedom with the increasing emphasis on efficiency as
functioning increases. It means that freedom provides a
precondition for efficiency and functioning in these districts.
Further, a comparison of HDI with capability dimensions at
various policy focus regions reveals that the level of HDI does
not alter the policy focus region. It means that human
development has no correspondence with capability dimensions.
Hence a separate focus is required to enhance capability
dimensions.

Do Corruption and Trade Openness Impede FDI?

Waqar Ali Ather Bukhari — 2021-01-27

Foreign direct investment (FDI) has been given much attention
in the recent past just because of its contribution to economic
development. However, there are several socio-economic
factors that impede FDI. Therefore, the objective of current
study is to probe whether corruption and trade openness affect
FDI. The study uses data from 1990-2015 for SAARC countries
and employs panel ARDL model to retrieve short- and long-run
results. The findings reveal that corruption plunges the FDI in
long-run, while trade openness increases FDI. On the contrary,
we report heterogeneous results in short-run. Additionally, we
deduce a few policy implications based on the findings of this
study.

Disentangling Horizontal and Vertical Intra industry Trade: Case of Pakistan

Touseef Hameed — 2021-01-27

This study systematically examines and decomposes Intra Industry trade (IIT) of Pakistan into horizontal Intra industry trade (HIIT), low-quality vertical Intra industry trade (LQVIIT), and high-quality vertical Intra industry trade HQVIIT components using unit value indices. The study also investigates decade wise IIT of Pakistan using GL indices, and the country-specific determinants of Pakistan’s IIT at the 1-digit industry level of SITC. Decomposition and measurement of Pakistan’s IIT show that in the last forty-three years HIIT dominates VIIT, while LQVIIT dominates HQVIIT industries. The empirical analysis of the last decade shows that LQVIIT dominates HIIT as well as HQVIIT, and in the last three decades HIIT, LQVIIT, and HQVIIT show constant, increasing, and decreasing trend, respectively. The empirical analysis of the last two decades shows that IIT of Pakistan is sharply increasing, IIT of Pakistan with major developing trading partners is more than with major developed trading partners. Distance and differences in human capital variables show an insignificant impact on IIT of Pakistan.

International Stock Markets Integration: A Case Study of Selected OIC Countries

Humera Iram — 2021-01-27

This study examines the integration in eight selected emerging stock markets from the OIC countries namely Pakistan, Bangladesh, Egypt, Indonesia, Iran, Saudi Arabia, Turkey, and Malaysia for the period of March 1998 to March 2016. The study adopts a combination approach by considering the combination of two countries, then a combination of three countries, and so on up to the n^th combination of the stock markets using the Autoregressive distributive lag approach. The results show that there is a systematic pattern of long-run equilibrium relationship among the stock markets of selected OIC countries. Malaysia, Indonesia, and Turkey are found to be leading stock markets in the selected group. The results of this study will provide a pattern of beneficial portfolio diversification to investors.

Investors' Imitation Behaviour: A Comparison of Islamic and Conventional Banks Stocks

Muhammad Iqbal — 2021-01-27

This study aim is to investigate the existence of herding behavior in the banking sector; conventional banking and Islamic banking sectors. By using daily data, Cross-sectional Standard deviation (CSSD) and Cross-sectional Absolute Deviation (CSAD) based methods are employed to estimate herding behavior in the aforesaid market. The study finds no evidence of herding behavior for investors in conventional banks as well as for investors in Islamic banks. The study also highlights the non-existence of herding behavior in extreme market conditions for both types of banks.

Can Exchange Rate Depreciation Lead to Increase in Exports of Pakistan? A Time Series Analysis

Tariq Mahmood — 2021-01-27

In this analysis, it is argued that Pakistan had passed through
different exchange rate regimes in the last two decades. This study
empirically analyses the impact of exchange rate fluctuations on
Pakistan’s exports. A monthly time series data of Export Volume,
Import Volume, Real Effective Exchange Rate, Average Applied
Tariff Rates for Pakistan, and major trading partners gross
domestic product (GDP) has been taken for 2003-04 to 2018-19.
Data for the first six months of 2019-20 has also been included in
the analysis, as it was the period that witnessed substantial
exchange rate depreciation. Ordinary Least Square (OLS)
technique has been applied to check the time-series impact
between Export Volume and Real Effective Exchange Rate and
weighted average exchange rate. On co-integrated series, the Error
Correction Model (ECM) has been used to find out the long-run
and short-run relationships among variables of the same period.
The results show that there is a positive, but less significant, impact
of currency variations on Pakistan’s exports, however, there is an
inverse nevertheless significant impact of applied average tariff
rates on Pakistan’s exports. Furthermore, there is a positive
correlation between the increase in exports and the weighted GDP
of its trading partners (which creates exportable surplus due to
industrial growth).

Financial Globalization and Financial Sector Effectiveness: An Index Based Analysis of Pakistan

Nazima Ellahi — 2020-10-13

This paper tried to assess the nature of relationship between
financial sector openness and financial sector deepening for
Pakistan. The study utilized data set of annual frequency on
financial sector openness index, institutional quality index,
trade openness and a set of control variables over a period
from 1995 to 2018. The application of econometric method of
Autoregressive Distributed Lag Model (ARDL) confirmed the
extensively debated long run association, and after having
established this, found the estimates (both short run and long
run). Results demonstrated that financial openness and
institutional quality improve the quality of financial sector
efficiency in Pakistan for short run; however, in the long run
financial openness did not lead financial sector development.
These findings indicate that policies promote financial sector
openness appear to help Pakistan to derive the benefits of
quality of financial sector efficiency. Our analysis suggests
that there are unavoidable risks associated with financial sector
openness. Therefore financial openness is not just an isolated
policy goal. Along with institutional quality sounds
macroeconomics framework is an essential prerequisite for
making sure that financial development is beneficial.

The Relationship Between Informal Institutions and Well-being: An Empirical Study of Selected Districts of AJK

Saeeda Yasmeen — 2020-10-13

This paper investigates the relationship between informal
institutions and well-being. Most of the literature highlights the
impact of formal institutions on well-being but the studies
related to informal institutions and well-being are rare. For
formal institutions there are well defined rules and regulations
with an aim to achieve certain objectives in the society, such as
police, judiciary, hospitals and government systems etc. For
informal institutions, the rules and regulations are not
documented, but have social approval and are well observed in
the society. It is assumed that strong formal and informal
institutions increase efficiency and productivity of individuals
and societies through structured processes and by lowering the
transactions cost. For empirical analysis of relationship
between informal institutions and well-being, we use primary
data, conducted under ?Divine Economics Survey – 2017?.
This survey had been conducted in 2017 in Azad Jammu and
Kashmir and in various cities of Pakistan. The survey has many
sections; however, we use the section about institutions and the
basic information. In this paper, response variable is well-being
and measured by single satisfaction question. Because response
variable is discrete in nature and have more than one category,
so ordered logit model is used. Empirical result shows a
positive and significant effect of informal institutions on wellbeing, while controlling other variables. Findings about other
control variables are in line with previous studies.

The Impact of the 2019 Indonesian Presidential Election and Inauguration on the Return of the Jakarta Islamic Index (JII)

Hendri Tanjung — 2020-10-13

The purpose of present study is to determine the impact of
political events, namely, Election Inauguration for President
and Vice President of Republic of Indonesia in 2019 on
Abnormal Returns on the Jakarta Islamic Index (JII) Shares.
This exploration employs the event study analysis method. The
time-period used was 230 bourse days from November 7, 2018
to October 30, 2019, including 7 days before and 7 days after
the election‘s inauguration for the President and Vice President
of Indonesia in 2019. From two political events, there is an
abnormal return that decreases after the event compared to
before event occurred, but the decrease is statistically no
significant difference.

Impact of Uncertainty on Cash Holding: Evidence from Manufacturing Firms of Pakistan

Muhammad Akram — 2020-10-13

This study investigates the impact of uncertainty on the cash
holdings of manufacturing firms of Pakistan. It also explores
the impact of uncertainty on cash holdings for financially
constrained firms. We employ dividend payout ratio as a proxy
for classification of financially constrained firms. In order to
mitigate the problem of endogeneity and to take into account
the dynamic nature of the panel dataset, we employ the twostep system-GMM using unbalanced panel dataset of 301 firms
covering the period of 2001 -2015. The results reveal that cash
holdings of firms increase with both macroeconomic and firmspecific uncertainty. However, the increase in cash holding
during higher macroeconomic uncertainty is more than that of
firm specific uncertainty. The reason behind is that firm
specific uncertainty can be hedged while macroeconomic
uncertainty cannot be evaded. The results also suggest that
financially constrained firms further increase their cash holding
while facing both sorts of uncertainty.

Impact of Conservatism and Earnings Management on Earning Quality: Evidence from Pakistani Listed Firms

Zahid Iqbal — 2020-10-13

This study examines whether accounting conservatism
(prudence) and earning management are related with improved
quality of earnings. Using a sample of 70 non-financial
Pakistani listed firms covering a 10 years period from 2008-
2017 with 700 observations. Quality of earning is measured on
the basis of Accrual quality measurement as proxy to earning
quality indicator. Basu Reverse regression approach is used to
measure conservatism (Prudence) and Modified Jones Model is
used for Earning Management. The results of the research
indicate a significant positive impact of conservatism and
earning management on quality of earnings in context of
Pakistan. This context will provide a source for shareholders,
stakeholders, controlling bodies of firms, regulators and other
concerned bodies to make decisions on the financial position of
the firm‘s on available financial reports.

Impact of Market Forces on Stock Market in Pakistan: A Time Series Analysis

Gulnaz Bhatti — 2020-10-13

The key objective of the study is to investigate the impact of
macroeconomic variables on the stock market in Pakistan. A
stock market is a place or organization where securities
instruments are traded among investors. Every type of risk
earning assets such as bonds, equity, shares, securities that are
traded is included in the financial market. The selected
variables in this study were the Gross Domestic Product
(GDP), Inflation, Interest Rate, Exchange rate, Cost of Capital,
Investment, Money Supply, and Consumer Price Index. The
GDP is taken as dependent variables and the impact of all
remaining independent variables on GDP. The study used the
time series data that covered the period from 1975-2016. This
study implies the Augmented Dickey-Fuller (ADF) test to
check the stationary of data, and the Auto Regressive
Distributive Lag Model for the Specification of data. To
analyze the long run and short-run association among variables
the coefficients of the variables are measured. This study
concluded that inflation, interest rate, investment, money
supply harm the gross domestic product. The impact of the
Exchange rate, Cost of capital, and the Consumer Price Index is
positive. The cost of capital is the amount of money that is paid
by using loans, funds, and instruments.

Economic Theory of Top One Percent: Blindfolds Created by Economics

Asad Zaman — 2020-10-13

Conventional economics theory against poor and works
very well for top 1%. Discussion of some central concepts
reveals how this theory gives an appearance of
objectivity, fairness and equity, but conceals strong bias
in favor of the rich. Negative outcomes of this theory are
observed at global level particularly during Global
Financial Crisis (GFC) 2007-08. Frequent empirical
failure of economics requires studying the real world
issues and actual behavior of human beings. But
economists continue to bring arguments and justifications
to systematic failures. It highlights their conscious
theoretical support to the narratives of top 1% at expense
of the bottom 90%. It blindfolds economists towards
reality, and let them consider natural human traits of
cooperation, generosity and social responsibility as
anomalies. On the other hand, Islamic economics defends
the cause of bottom 90%. This study briefly illustrates the
deceptions of ET1% in some core concepts and its
contrast with ET90%. It provides sufficient evidence to
recognize the hidden objectives of current economic
theory.

Determinants of Child Malnutrition: A Structural Modeling Approach for Pakistan

Shahnila Naz — 2020-10-13

The study aims to determine the inter consistency between
determinant of child malnutrition in Pakistan using structural
equation model. For analysis the socio-economic data
pertaining to 3476 children under five years of age is taken
from Pakistan Demographic and Health survey 2012-13. The
determinants of child malnutrition are interrelated and complex.
The structural equation model shows that maternal (variables
pertaining to mother of child) factors are both directly and
indirectly affecting child malnutrition. Maternal factors affects
through biological (variables pertaining to child) factors and
then biological factors affect malnutrition status of the children.
So biological factors are playing a mediating role in child
malnutrition outcomes in the present study. Whereas
Environmental (variables pertaining to the surrounding
conditions in which child lives) factors can affect behavioral
(variables pertaining to the quality and type of care child
received) factors and then behavior affect child malnutrition
outcomes. But environmental factors are not directly affecting
child malnutrition

THE EFFECT OF INVESTMENT IN HUMAN RESOURCES ON ECONOMIC GROWTH OF DEVELOPING COUNTRIES

Muhammad Baqir Ali — 2017-12-01

This study basically examined the effect of investment inhuman resources on economic growth of developing countries. It used a panel dataset comprise of 98 middle and upper middle developing countries over the period 1981-2014. The dataset comprises 12 observations for each country at three year intervals. Analytical technique was the Hasuman test which showed that fixed effect model is appropriate for our research analysis. The results obtained from using fixed effect model were quite interesting. That is, Gross enrolment ratio from primary to tertiary, infant mortality rate , school life expectancy, gross capital formation, consumer price index (at 10 per cent level) and poverty head count ratio showed a significant effect on growth whereas GINI index was insignificant to influence economic growth. The study concludes that gross enrolment ratio, poverty head count ratio and consumer price index has an adverse effect on annual growth rate i.e. they are negatively related. Similarly the study also concludes that infant mortality rate, school life expectancy, gross capital formation and GINI coefficient have positive effect on growth of countries. Thus it is concluded that different variables have different effect on economic growth.

THE IMPACT OF MICROFINANCE TO REDUCE POVERTY OF RURAL HOUSEHOLD: THE STUDY DISTRICT SIALKOT, PUNJAB, PAKISTAN

Aamir Hussain — 2017-12-01

This study examines the impact of microfinance on poverty alleviation keeping in view the factors that affect the poverty which include to execution of income and expenditure, health and food security, housing infrastructure, education and agriculture. This is a survey based research & primary data is collected for this study through a structured questionnaire that comprising various aspects of microfinance & poverty alleviation. Multistage technique is used for data collection from clients of Akhuwat Trust and Kashf Foundation that is related in district Sialkot. Total numbers of respondents are 213. Wilcoxon Model is used to check the relationship among microfinance, income and expenditure, health and food security, housing infrastructure, education and agriculture to check the effect of microfinance on poverty. The study found a positive effect on poverty alleviation and significant impact on poor household and also observed that it leads to decrease in poverty. The result shows good and significant impact of microfinance programs on Income, health and food security, housing infrastructure, education and agriculture.

DOES FOREIGN FINANCIAL RESOURCES PROMOTE ECONOMIC GROWTH IN SAARC COUNTRIES? A PANEL COINTEGRATION ANALYSIS

Ibrahim Sulaiman — 2017-12-01

The study was conducted to investigate the impact of foreign debt financing and foreign direct investment on economic growth for South Asian Association of Regional Cooperation. The study was conducted using two models. The findings of dynamic ordinary least square (DOLS) for model 1 suggests that total foreign inflows has negative and significant effect on economic growth. The findings of fully modified ordinary least square (FMOLS) of model 2 suggests that external debt financing and foreign direct investment has positive and significant effect on economic growth. The reason for negative effect of total foreign inflow could be caused by inefficient use of resources. Whereas in the second model the positive effect of external debt financing and foreign direct investment suggests that external debt is used for debt servicing and balance of payment corrections. Foreign direct investment effect is low in the long run because of higher budget deficit and low investment in infrastructure.

IMPACT OF CORPORATE GOVERNANCE ON FIRM FINANCIAL PERFORMANCE IN ISLAMIC FINANCIAL INSTITUTION

Areeba Sulaiman — 2017-12-01

The paper discusses the influence and relationship between corporate governance practices and firm financial performance in Islamic banking sector. The main purpose of this study is to find or identify various factors or variables that affect the firm financial performance. Corporate governance focuses on three meters as board size, a number of meeting and audit committee size and firm financial performance has also three indicators return on equity, return on asset and earning per share. Data relates to corporate governance and firm financial performance is collected from annual reports of different Islamic banks to analyze the results. Data reveals the positive relationship between corporate governance and financial performance of Islamic banking sectors. The most outstanding results of this study has considerable and strong positive relationship in large board size and firm financial performance in developing countries as Pakistani circumstance as Pakistani circumstance.

FINANCIAL PERFORMANCE OF ISLAMIC BANKS IN PAKISTAN

Muhammad Tariq Majeed — 2017-12-01

In recent years, the fast growth of Islamic banks has generated debate among economists and policy makers about stainability and performance of Islamic banks. This paper aims to analyze the financial performance of Islamic banks as compared to Conventional banks from 2006 to 2014. The paper considers Financial Ratio Analysis (FRA) to analyze and compare the performance of Islamic and Conventional banks in Pakistan. The results show that Islamic banks are better capitalized, less risky and have higher liquidity. In contrast, Islamic banks are less profitable than Conventional banks. Data related to Burj bank, Dubai Islamic Bank and Bank of Khyber in Pakistan for 2006 is not available. Size of Islamic banking industry should be enhanced by merging with Islamic financial institutions to achieve economies of scale and better efficiency. The study assists investors, creditors, debtors and managers in making better decisions. It also provides latest valuable information to regulators and policy makers in making rules and policies for financial industry in Pakistan.

THE IMPACT OF FOREIGN CAPITAL INFLOW ON ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM SELECTED ASIAN COUNTRIES

Mirajul Haq — 2017-12-01

This study is an attempt to analyze the impact of foreign capital inflows on economic growth in selected Asian countries. In this association, we test the hypothesis “foreign capital inflows affect positively economic growth in selected Asian countries.” The Empirical analysis is made through Pooled Ordinary Least Square (OLS) estimation approach using data set of six selected Asian countries from 1990-2013. The findings of the study reveal that long run economic growth in selected Asian countries is largely explained by foreign capital inflows. In addition the findings of the study indicate that physical capital and trade openness also explain the pace of economic growth positively. The study concludes that in selected Asian countries foreign capital, physical capital, and trade openness are the key determinants of economic growth.

OPPORTUNITIES AND CHALLENGES: ROLE OF CITIES IN A RAPIDLY URBANIZING PAKISTAN

Zahid Asghar — 2013-06-01

Cities are considered as hubs of problems like crime, environment, traffic congestion, pollution, disease etc. But cities are, at the same time, are origin of solution of our problems and they are centers of productivity, innovation and machine for collecting people together. Pakistan’s urban population is expanding rapidly and by 2050 it is expected to be more than 50%. There is strong relationship between urbanization and economic growth. As Pakistan will observe rapid urbanization in near future so it needs to spend trillions of rupees on city building in the next 30 to 40 years. Planning decisions made today can have immense implications for cities’ role in economic growth in the coming 2 to 4 decades from now. Urbanization has gone hand in hand with economic growth. Objective of this study is to assess; Challenges of development like cities’ infrastructure investment, provision of basic services like water, sanitation, public places, affordable housing, connectivity etc., and opportunities cities offer in terms of productivity, innovation, idea and knowledge generation since cities host manufacturing and services sector which contributes roughly 4/5 of our economy.

DETERMINANTS OF DOMESTIC INVESTMENT A CASE STUDY OF MIDDLE INCOME ASIAN COUNTRIES

Nadeem Raza — 2013-06-01

Investment is a catalyst for economic growth, and the efforts to explore the factors stimulating investment, whether domestic or foreign, public or private, are unstoppable. The present study attempts to investigate empirically, the factors responsible for shaping up domestic investment in the middle income Asian countries. We use a sample of twelve countries and the data extends over a period of 31 years ending at 2010. We employ empirical Bayesian approach for analysis, after undergoing the preliminary testing of data through panel unit root test, redundancy test and panel co-integration. The results suggest that domestic investment is positively determined by lagged investment, real GDP per capita growth, domestic credit to private sector, domestic saving, trade and government expenditures whereas a negative relationship of domestic investment is observed with inflation and interest rate. Findings of the study provide a torch to the policy makers who intend to boost domestic investment for attaining higher growth rates.

POVERTY, GLOBALIZATION AND THE ROLE OF STATE: A COMPARATIVE ANALYSIS FOR ISLAMIC COUNTRIES

Muhammad Tariq Majeed — 2013-06-01

This study examines the impact of globalization on cross-country poverty using a new comparable panel data set for developing countries over a long period 1970-2008. The main findings of the study are: First, openness to trade exerts adverse effects on poverty in all sample developing countries while FDI helps in reducing poverty only in OIC countries. Second, growth elasticity of poverty is negative and significant in all countries; however, the growth elasticity of poverty is high in the case of OIC countries. Third, inflation adversely affects poverty in all sample countries. Fourth and finally, the role of government is insignificant in OIC countries while it is robustly significant with a negative sign in Non-OIC countries. Thus, government spending helps in reducing poverty only in Non-OIC countries. The overall results of this study indicate that globalization accentuates not ameliorates poverty.

MOBBING AND ORGANIZATIONAL COMMITMENT: A CASE STUDY OF BANKING SECTOR IN PESHAWAR

Aminullah Khan — 2013-06-01

Mobbing is a group activity in which few people are collectively exercises negative behaviors against a single individual to pressurized and enforced to bring him/her in an unsecure position and which ultimately resulted in to drag out of the organization. Current study addresses this behavior by collecting the data questionnaire survey from the banking sector of Peshawar (KPK). Questionnaires were distributed among the 90 employees of the banks with the response rate of 63.3%. Main finding of the study suggest that mobbing and organizational commitment have significant relationship. The study findings also suggest that affective commitment has highly significant association, while intension to leave the organization is weak and positively correlated to mobbing in the workplace.

ESTIMATING INCOME AND PRICE ELASTICITIES FOR FOOD COMMODITIES USING TIME SERIES DATA FOR PAKISTAN

Sumaira Maqbool Abbasi — 2014-06-01

This study is conducted to analyze the consumer’s behavior in Pakistan regarding their income and prices of ten most commonly used food items incorporating annual disappearance data of Pakistan for the period 1971-72 to 2010-2011. Characteristics of time series data (stationarity and cointegration) have been checked before specifying the most appropriate form of the model. Three models namely LA/AIDS, static LA/AIDS and finally ECM LA/AIDS are estimated by employing the seemingly unrelated regression (SUR). The parameters estimates of static LA/AIDS and ECM- LA/AIDS are further used to find short- and long-run demand elasticities. The expenditure elasticities from LA/AIDS and Static LA/AIDS show that all commodities are necessities except rice and meat. However, while using ECM- LA/AIDS the results show that all commodities are necessities except milk and fruits. For almost all items the own price elasticities have negative signs and reasonable in magnitude except for rice and fruits while using LA/AIDS and Static LA/AIDS. However, own price elasticities for all commodities have negative sign with the exception of fruits while using ECM LA/AIDS.

DOES PARENTAL EDUCATION AFFECT FERTILITY RATES? EVIDENCES FROM PAKISTAN (1976-2010)

Sehar Munir — 2014-06-01

The study empirically examines the relationship b/w parental education and fertility for Pakistan from 1976-2010. We have employed Johenson Cointegration and Error correction model to test the long run as well as short run relationship. Results show that infant mortality rate and old age dependency increase the fertility while per capita income, urbanization and education of both male and female reduce the fertility. The impact of male education on fertility is smaller than that of female education. The possible choices for lowering fertility rate are both implementing low infant mortality rate and promoting female education policies. Lowering fertility rate through increasing access to quality reproductive health services is an important policy.

KNOWLEDGE, WISDOM, LEADERSHIP AND VISION: A DIVINE PERSPECTIVE

Jamil Anwar — 2014-06-01

The objective of this paper is to define the term ‘knowledge’ in Divine perspective and to explain its relationship with wisdom, leadership and vision of an organization. The paper provides a unique conceptual framework for learning organizations where authentic sources of knowledge combined with scientific knowledge is shown as a foundation for crating wisdom, leadership and vision in organizational setting.

Divine knowledge is authentic and is based on spirituality, religiosity and ethics while scientific knowledge comprises professional and technical know how about a phenomenon. Knowledge is defined as the sum total of Divine knowledge and scientific knowledge. This combination of knowledge will create wisdom both at individual level and at organizational level. Leadership equipped with this knowledge and wisdom, will be authentic and the vision of such organizations is sound, clear and compelling.

OPTIMAL NEIGHBOR BALANCED DESIGNS TO IMPROVE AGRICULTUAL ECONOMY

Hammad Naqwi — 2014-06-01

Agricultural growth plays a vital role in improving Pakistan’s economy. Agriculture sector of Pakistan is considered as a major productive sector of Pakistan’s economy. Around 61% population is living in more than 50,000 villages in Pakistan. Economic development, progress and prosperity cannot be achieved without improving agricultural sector. It provides employment opportunities and produces exportable items for foreign exchange. So, agricultural sector is helpful to make rapid economic development. Neighbor designs increase the production and improve efficiency in agriculture, horticulture and forestry by minimizing the experimental error. In agriculture, guiding principle of neighbor design is to enhance production through effectiveness of cost and time by minimizing neighboring treatment/plot effect which contributes significantly to GDP growth and leads to poverty reduction. Neighbor effects in agriculture can be observed in experiments where tall plants effect the growth and production of neighboring smaller plants. Neighbor designs reduce this neighbor effect. In this paper optimal neighbor balanced designs are developed which increase the agricultural economy. A series of optimal one-dimensional neighbor designs have been developed for odd prime number of treatments.

RENT-SEEKING, INSTITUTIONS AND ECONOMIC DEVELOPMENT: A TALE OF RENT-SEEKING SOCIETY

Karim Khan — 2015-06-01

The institutional perspective of cross-country differences in economic outcomes gives contrasting explanations on the persistence of inefficient institutions in developing countries. Colonization, social fragmentation and the existence and use of natural resources are the most frequently discussed causes in the available literature. In this study, we analyze all the three explanations together by providing a case study of Nigeria. Nigeria is characterized by colonial legacy, social divide revealed by ethnicity and religion, and huge windfalls from oil. Based on our descriptive analysis, we find that the lack and incoherence of formal institutional order is the main factor for Nigerian underdevelopment. Ethnic politics has shaped the formal institutional framework which is inefficient and incoherent. Colonial legacy has reinforced the effect of ethnicity by failing to provide a national ideology and instead, providing a regional structure to rule. Similarly, the windfalls from oil have intensified the effect of ethnicity by invoking civil conflicts, arising mainly from the distribution of common pool. Thus, no single factor on its own can explain the persistence of inefficient institutions; rather, it is the combination of exogenous and endogenous factors that shape institutions.

THE IMPACT OF GOVERNMENT DOMESTIC VERSUS EXTERNAL DEBT ON MONEY DEMAND: EMPIRICAL EVIDENCE FROM PAKISTAN

Ayesha Zahid — 2015-06-01

This study attempts to analyze the relationship between government debt and money demand in the context of Pakistan by taking the annual data over the period of 1976 to 2012. In this regard, effects of government domestic alongside external debt are examined separately under the framework of Autoregressive Distributed Lag Approach of cointegration. The findings of Bound test analysis and negative sing of ECM (-1) term, both indicate that positive significant relationship exists between domestic debt and demand of real money balances in the long run as well as in short run. It suggests that government internal debt is the source of net wealth and bondholders feel them wealthier by considering the interest income as an increase in their private wealth. On the other hand, the empirical result revealed that no cointegration relationship exists between external debt and money demand, which implies that external debt does not view as a source of net wealth and government of Pakistan remains ineffective to transfer the proceeds from public external debt to the domestic individuals who are willing to invest or consume. So, in our findings, only domestic debt is appeared as a missing variable in the money demand function.

AN ESTIMATION OF MARKETING MARGINS OF INLAND FISH IN DISTRICT FAISALABAD, PAKISTAN

Shafqat Rasool — 2015-06-01

This paper attempts to estimate marketing margins of major intermediaries involved in the marketing of inland fish in district Faisalabad using primary source of data. Formal interviews were conducted from a representative sample of 80 farmers, 40 commission agents and 40 retailers selected using stratified random sampling technique with proportional allocation. Findings of the study indicated, commission agents earned Rs.560 and Rs.475 per maund as net margin respectively in case of Rahu and Thaila breeds. Similarly the net margins of retailers were estimated as Rs.675 and Rs.450 per maund for Rahu and Thail breeds respectively. High commission fee beyond the limits is just the exploitation of the retailers. Government should lower down the commission fee and fix up to a reasonable level for facilitating the marketing functions.

IMPACT OF FOSSIL FUEL ENERGY CONSUMPTION ON CO2 EMISSIONS: EVIDENCE FROM PAKISTAN (1980-2010), A REVISIT

Sehar Munir — 2015-06-01

The present study empirically analyzes the impact of fossil fuel energy consumption on CO₂emission for Pakistan using data from 1980-2010. Our broad objective is to test the environmental Kuznets curve (EKC) hypothesis and factors that affect the energy consumption. We have used Johansen Cointegration approach and a Vector Error Correction Model (VECM) to test the long run as well as short run relationship between variables. A log linear quadratic equation is specified to test the EKC hypothesis. Results support the existence of inverted U hypothesis. Industrial value added and trade openness positively affect the CO₂ emission while financial development reduces the CO₂ emission. Results of the energy consumption equation show that income, investment, population and manufacture export positively affect the energy consumption while manufacture import negatively affect the energy consumption.

Multiple Indicators Hamdani Formula for HEC Journal Recognition and Ranking

Atiq ur Rehman — 2016-06-01

Since last two years, Dr. Syed Nisar Hamdani along with a team of academicians is working on a new multiple indicators formula for recognition and ranking of academic journals by Higher Education Commission. This article comments on the debate article published in KER Vol. 25, No.1, 2016 and extends the debate about why the newly proposed formula is needed for recognition of economics or social science journals and how far it is different from the existing formula of journal recognition by Higher Education Commission of Pakistan.

Review of Divine Economics Framework

Salman Ahmed Shaikh — 2016-06-01

The primary research aim of the Divine Economics framework is to provide an empirical basis of behavioral comparison between religious and non-religious agents with regards to their economic and non-economic choices. Divine Economics framework is an effort to establish cross communication between mainstream economists and faith-inspired economists by using an appropriate and universal methodological framework, which is sufficiently scientific, objective and broadly agreeable in academics. Divine Economics framework endogenizes religious attributes which may potentially enable the comparison of choices between religious and non-religious as well as less-religious and more religious economic agents. However, reliance on stated preferences, overlap between religious and non-religious activities, inability to observe the motivation and intention behind choices and to judge the quality of religious activities are some of the challenges in this research framework. In the future research, Divine Economics framework could incorporate how faithful economic agents use common property resources and public goods. It can explore whether the faithful economic agents differ in their choices with regards to biodiversity and negative externalities. Lastly, the future research in Divine Economics framework can also explore whether faithful economic agents differ in their willingness to pay for public goods, environmental protection programs, animal protection programs, social protection programs and other voluntary welfare activities.

Modeling Oil Price, Exchange Rate, and Interest Rate Volatility in Pakistan

Abdul Rashid — 2016-06-01

The purpose of this study is to model and forecast volatility of Brent and West Texas Intermediate crude oil prices, nominal and real exchange rate, and money market rate and Treasury bill rate in the context of Pakistan. For this purpose, five linear and four non-linear models are used. The estimation period is January 1985 to December 2013. The in-sample estimation results show that the asymmetric GARCH family models well captured the volatility dynamics as compared to the symmetric GARCH models. We show that for NERR, RERR, MMR, and TBR linear models forecasted well as compared to the non-linear models. However, for both CBNR and WTIR, non-linear models forecasted well. Overall, this study concluded that linear models forecasted well as compared to the non-linear models on the basis of minimum value of RMSE. These findings are important for the policy makers, investors, and financial market participants for making appropriate policies, investment, and asset performance evaluation.

Determinants of Women Empowerment in Pakistan: Some New Evidences from PSLM (2011-12)

Ashar Awan — 2016-06-01

There are various criteria and determinants to quantify Women Empowerment. The present study attempted to address two key concerns; Women decision about education and Women decision about more children to explain Women Empowerment in Pakistan. For the quantitative analysis, data set from PSLM (2011-2012) has been used. Binary Logistic Regression is applied as an estimation strategy. In addition, the detailed descriptive analysis has done prior to empirical analysis to see the relative importance of different determinants in Women Empowerment. The study reveals that the ration of empowered women is very low in the country; unfortunately, women enjoy relatively substandard status as compared to men. Education level of women generally improves decision making capacity of a woman. Similarly, age, type of educational institutions and paid work proved to be significant factors of women decision about education. On the other hand, increasing number of children enhance the level of a woman empowerment in family. Further, there exists huge proportionate disparity between rural and urban women regarding the decision making aptitude. Even though the government is running number of programs to address the issue but still the situation has remained gloomy mainly because there exist highly constrained autonomy of females in contrast with males within the society. There is a dire need to extend awareness to empower women across all of the districts of country to fasten the development process.

An Empirical Investigation of the Determinants of Savings and Investment Relationship: Evidence from South Asia

Farah Naz — 2017-06-01

This study examines the possible determinants of savings and investment (S-I) relationship in case of South Asia. The study adopted a unified framework to investigate relative significance of possible factors of S-I relationship. Firstly; saving retention coefficients has been estimated for each of six countries included in the analysis for the period of 1980-2015. Secondly, the dependent variable of saving retention coefficient has been regressed on the potential factors- country size, productivity shocks, interest rate differentials and openness-for the S-I association. The results reveal that S-I form a stable long run relationship for each country except Pakistan. Further, regression analysis indicates that country size, interest rate parity and productivity shock have positive and significant role in explaining the FH puzzle, while openness of the economy has no influence on the S-I interaction. Few important policy implications have been drawn from the results of the study; (i) ineffectiveness of financial openness in explaining the FH puzzle may indicate that these countries are unable to attract the investors, as investment do not merely depends upon the normal returns (iii) these countries need to bring consistency in economic policies so that openness could pay the desire role and (iv) our study also suggests that interest rates or country risk premium influenced the degree of financial integration. The central banks of South Asia countries should maintain interest rate parity with the rest of the world.

Economic Growth and Income Inequality Nexus: An Empirical Analysis for Pakistan

Muhammad Tariq Majeed — 2016-06-01

This study investigates the impact of income inequality on economic growth in Pakistan using annual time series data from 1975 to 2013. The empirical analysis for the effect of income inequality on economic growth is based on the ARDL approach to cointegration. The empirical findings show that inequality exerts significantly positive influence on annual economic growth of Pakistan. It implies that annual growth is not driven by the poor which is also confirmed by the negative influence of poverty on growth. Though inequality exerts positive influence on growth but such type of growth cannot be sustained as the poor are not part of the growth process.

The Contributing Factor of Dividend Imbursement Behavior: An Empirical Study on Textile Sector of Pakistan

Ghulam Abbas — 2019-06-01

The dividend payment behavior of the corporate firms is determined by number of factors which have never been researched in Pakistani textile industry. The main aim of this study is to identify those factors which likely to play an important role in determining the dividend payment behavior of the textile firms in Pakistan. The data of 169 textile firms listed on KSE is collected from the Balance Sheet Analysis (official document issued by SBP) for the year of 2003 to2015. This pooled data based on 1218 firm year observations is analyzed by using Logistic Regression Model and overall model of this study is found to be significant with X2(8, N= 1218) = 421.25, p<0.0001 and this significance of the model is also supported by Hosmer and Lemeshow Test (p-value > 0.05). The results indicate that firm growth and debt to equity ratio have negative relationship with the firms’ dividend payment behavior while rests of the factors are positively related to dividend payment behavior of studied firms. Our findings also indicate that size of the firm, earnings, debt to equity ratio; volatility and tangibility are the significant factors of firms’ dividend payment behavior. More specifically the size of the firm is found to be the most dominant factor in context of the Pakistan’s textile sector. We also found that there are very less number of large firms which regularly pay dividends but most of the firms use their earnings for growth rather than paying it as dividends. In addition, they often use long term loans for financing rather than issuing stocks.

Socio-Economic Factors Influencing Students’ Drop Out At Primary Level: A Case Study of Working Folks Grammar Schools District Haripur

Syeda Abida Bukhari — 2019-06-01

The purpose of current study was to investigate Socio-Economic Factors Influencing Students Drop Out At primary level. The data are taken from working folks grammar schools of District Haripur. Keeping in view the importance of primary education for national and human resource development, Pakistan in all its educational policies and plans has laid great emphasis upon the promotion and universalization of primary education. However it has partial success in achieving this goal till today. It was found that family affairs, conflict between mother and father, inferiority complex due to social reasons, bad company of the students in the society, poverty of parents and the thinking part of students are the major reasons contributing to student’s dropout. In addition to these, the conservativeness of the society, lack of comparable rights to students, low rate of literacy, unequal partition of knowledge, ecofinancial desires of family and lack of job opportunities also contribute to student’s dropout. These conclusions are aligned with past studies on similar subject such as Ghafoor and Baloch (1990) and Joubish & Khurram (2011)

Public Expenditure and its impact on Economic Growth: A case of Pakistan

Sadıa Ejaz — 2017-06-30

The public expenditures are very important and basic necessities of every country. It plays crucial and dynamic role in each economy and government has responsibility to provide them. This study examined public expenditures impact on economic growth by using time series data from1982-2017 in case of Pakistan. The variables are growth rate as GDP, development expenditure, defense expenditures, health expenditures and education expenditures. The ordinary least square (OLS) test and CUSUM, CUSUM Square tests are applied to check relationship between public expenditures and economic growth. This study concludes with mix results, which indicates that there is a significant positive relationship between development and health expenditures on economic growth. Furthermore, defense and education expenditures have negative relationship on economic growth. Moreover, it is recommended that public expenditures should be used in appropriate way; if it is not used in accurate place it would not be favourable for Pakistan economy.

TAX REVENUE DETERMINANTS OF PAKISTAN

Afzal Mahmood — 2017-06-30

The world is rapidly transforming into global village and trade liberalization has gained exceptional attention from various developed as well as developing. Pakistan has been facing continuous fiscal deficit problem on an average of 5.2 percent of the GDP. Pakistan has adopted a number of tax reforms and administrative measures to improve tax collections. The policy option of trade liberalization causes the problem of a reduction in the revenue collection from customs duty. Reduction of trade tax revenue due to trade liberalizing is a common problem in both the developing and developed countries. Thee research focused on the fiscal costs of trade liberalization, which Pakistan has had to endure. The study tried to estimate the determinants of the tax yield in Pakistan, to improve the tax capacity of Federal Board of Revenue. The fiscal policy maker facing issue to raise the tax revenue to compensate the loss of trade tax revenue due to trade liberalization. In this case study we tried to highlight the determinants of tax revenue of Pakistan and estimates made for the period of 1995-2015 through VAR model. The Wald coefficient test (F-test) which showed the existence of a strong co-integration between tax revenue and all the other independent variables. The long-run coefficients of these variables showed that effective tariff rates, agriculture to GDP ratios, and capital openness have shown significant and positive impacts on the tax revenue of Pakistan during the period under consideration. It is suggested that supportive macroeconomic policies and conducive environment facilitate trade policies in Pakistan as tax revenue determinants are identified for successful implementation of trade liberalization policies in the economy of Pakistan.

DOES TRUST MATTER? AN EMPIRICAL INVESTIGATION INTO THE RELATIONSHIP BETWEEN TRUST AND CORRUPTION

Farzana Naheed Khan — 2018-12-01

The study examines the relationship between social values measured as trust and corruption using the cross sectional data for a sample of 84 countries for the period 1984 to 2014. The study employs OLS as well as instrumental variable techniques for the estimation purposes while includes economic development, economic freedom and trade openness as control variables. Consistent estimates of social values are obtained with alternative estimation techniques confirming the negative relationship between social values and corruption. Additionally, the study finds that economic development and economic freedom have significant negative impact on corruption however, the study could not document any significant evidence for trade openness. The empirical findings of the study have important implications for policymakers while designing policies to curb corruption. The findings suggest that social values along with economic freedom are quite helpful in controlling corruption and therefore, social values should be focused in educational programs and in the planning of human capital investments along with traditional determinants of corruption.

ROLE OF EXTERNAL SHOCKS IN THE MOVEMENTS OF REAL EXCHANGE RATE: A DYNAMIC ANALYSIS FOR PAKISTAN

Adiqa K. Kiani — 2018-12-01

The study investigates the role of external occurred in Pakistan’s economy during 1981 to 2012 with the following supporting variables (in literature known as fundamentals of exchange rate) including capital inflows (KI), trade openness (TOP) in the movements of Real Exchange Rate (RER) in Pakistan. In order to examine the role of external shocks, Error correction model (ECM), Johnson Cointeregation Technique and Impulse Response Function (IRF) have been applied to capture the short -run and long-run dynamics of the impact of external on the RER. Econometrics analysis supports the results of Cointegration, ECM and IRF analyses. Role of external shocks in the movements as well as determination of RER in Pakistan has also been analyzed. Exchange rate would be appreciated due to external shocks & improvement in the fundamentals like KI, where as deviation of RER significantly from its equilibrium level require immediate measures to correct it in order to maintain the external competitiveness of the economy. The results also reveal that external shock (D₁) has lager influence on RER in short run as well as in the long run.

An Assessment of Pre and Post Pak-China Free Trade Agreement: A Comparative Advantage Analysis of Textile Sector of Pakistan

Lubna Naz — 2018-12-01

Regional trade is a huge opportunity for economic growth in Pakistan and must be assigned priority in Pakistan's economic policy. The signing of the Free Trade Agreement (FTA) between Pakistan and China in 2006 brought an opportunity for Pakistan to improve its overall trade performance while steering its exports composition towards geographically viable and hence, more profitable locations. The textile sector of Pakistan is the largest manufacturing sector and China lies in the top 10 export partners of Pakistan. In order to investigate the trade relations between Pakistan and China in light of the Free Trade Agreement (FTA), this study examines pre and post Pak-China FTA effects for the textile sector of Pakistan using revealed comparative advantage technique, Balassa Index (1965) at Harmonized system HS-2, HS-4 and HS-6 digits level. A comparative analysis based on the two phases of Pak-China FTA, for phase I, the study considers 2004 as pre-FTA period and 2013 as post-FTA period. However, for phase II, 2013 is considered as pre-FTA and 2015 as post-FTA period. Additionally, the study further investigates the future prospects of textile sector by calculating an indicative potential of the top potential textile exports to identify that how Pakistan can further be benefited from trade with China in the future. The findings of the study revealed that the export potential of the textile sector has declined and showed greater focus on low value added products. Additionally, an indicative potential analysis also showed that the top potential textile exports showed higher value of indicative potential over and above US$ 100 million in 2013 but due to decline in China’s demand, these were products removed from the list. This is because of the inefficiencies of the textile sector particularly due to the prolonged energy crises which have been imposing adverse effects on the industrial sector of the country.The government should take serious efforts to take the economy out of the energy crisis first and to ensure the growth of textile exports.

How Do the Technology Transfer and Trade Openness Affect Income inequality: A Panel Data Analysis?

Muhammad Muzammil — 2018-12-01

This study examines the impact of trade openness on the income inequality in the developing and developed countries. Additionally, we see if technology transfer and changes in the ratio of skilled to unskilled labor and educational attainment have any role in influencing the income inequality. We used panel data for 104 countries from both developed and developing countries during 1980-2014. We estimated the relationship using fixed effects and random effects panel regression analysis as well as system GMM technique for robustness check. We find that trade openness, expenditure on education and ratio of the skilled to unskilled labor significantly reduce inequality in both developed and developing countries. Increase in technology transfer and role of religion in politics significantly reduces inequality in the developing countries only whereas corruption increases income inequality in the developing countries only.

Ricardian Equivalence, Twin Deficits and Feldstein-Horioka Hypotheses: Empirical Analysis form Pakistan

Ayesha Zahid — 2018-12-01

The study attempts to investigate relationship between both budget and current account deficits for the Pakistan using annual data from 1976 to 2016. In this regard, three hypotheses, Ricardian Equivalence (RE), Twin Deficits (TD) and the Feldstein-Horioka (F-H) are tested under the framework of Multivariate Cointegration techniques (Johansen, Autoregressive distributed lag) and Error correction modeling. The cointegration results reject the RE hypothesis and support the validity of TD hypothesis for Pakistan. It implies that debt-finance tax cut raised the interest rate which attracted the capital inflow. The findings of error correction model also support the short run linkage between both deficits and confirm that long run relationship exists between them, when interest and exchange rates are included in the model. The results of cointegration test further reveal a positive relationship between the current account deficit and investment in the long run. The long run coefficient of investment indicates the high degree of foreign capital mobility and rejects the Feldstein-Horioka hypothesis. However, positive and less than one value of short-run coefficient of investment provide weak support for the Feldstein-Horioka hypothesis. So, the empirical results suggest that investment (coefficient of foreign capital inflow) has a significantly positive impact on current account deficit only in the long run.

Privatization Predicament and Shari’ah Compliant Alternate Solutions

Malik Shahzad Shabbir* — 2018-06-01

Abstract

This paper proposes viable Shariah based alternate solutions to the privatization dilemma. Instead of privatization through outright sale of national assets, equivalent funds can be raised through long term Shariah structures without alienating national assets permanently. This will help safeguard public welfare and in the line with Maqsaid al-Shari’ah, Hifzal al-Mall, and Mamala fiqh Marsala. Privatization of national assets is generally a matter of great public interest. This paper reviews reasonable arguments which do exist on both sides of the divide. Nevertheless, once privatization has been done reversing the process would be neither fair, nor justifiable and hence the balance of convenience in this public policy matter tilts, somewhat in favor of not privatizing national assets, if reasonable alternates are available, or possible for achieving most, if not all of the objectives which the privatization process is expected to achieve without permanently alienating national assets.

Keywords: privatization dilemma, national assets, spectrum, family silver, public policy.

Dynamic Effects of Fiscal Policy Shocks on Macroeconomic Variables: An Application of SVAR Methodology for Pakistan

Shah Abbas — 2018-06-01

Change in government spending and tax has significant impact on main macroeconomic activities. This study aims to investigation dynamic effects of fiscal policy shocks on macroeconomic variables in Pakistan. The empirical results are carried out by using the structural vector autoregressive model. Two identification approaches, Blanchard and Perotti and recursive approach are used to identify the fiscal policy shocks. The analysis is conducted on quarterly data for the variables government spending, tax revenue, prices, private investment and GDP for the period 1975-2-14. The empirical results shows that government expenditure shock and tax revenue shock relatively highest on price and lowest on private investment. The government spending shocks decrease private investment and GDP, while tax revenue shock increase GDP and government spending. The results suggests that higher government spending have negative impact on private investment due to the large part of government consumption financing from the private sector. It is concluded that tax revenue shock increase the government spending, while government spending does not significant impact on the tax revenue. This result conform that expansion of fiscal policy increase the public debt services in Pakistan due to fiscal miss-management.

Key wards: Fiscal Policy Shocks, Macroeconomic Variables, SVAR Methodology

Wellbeing and Informal Institutions: An Empirical Analysis

Dr. Anwar Shah — 2018-06-01

Abstract
The study investigates the relationship between informal institutions and wellbeing. We
find in the literature work related to formal institutions and wellbeing. However, the
studies related to informal institution and wellbeing are rare. Formal institutions are rules
and regulations which are well defined and aims for achieving some objective in the
society such as police, judiciary, government etc. In the other hand informal institutions
are rules which are not documented but observed in the society for long and have social
approval. It is assumed that strong formal and informal institutions increase efficiency
and productivity of individuals and societies by lowering transactions cost. For empirical
analysis of relationship between informal institution and wellbeing we use primary data
conducted under Divine Economics Survey 2017. This survey has been conducted in
2017 in Azad Jammu and Kashmir and in various cities of Pakistan. The survey has many
sections however we use the section about institutions and the basic information. Our
response variable is wellbeing and measured by single satisfaction question. Because our
response variable is discrete in nature and have more than one category so ordered logit
model is used. Results show a positive and significant effect of informal institution on
wellbeing while controlling for other variables. Findings about other control variables are
in line with previous studies.

Interest Payments, Fiscal Deficit and Economic Growth :A Case Study Of Pakistan

Dr. Muhammad Ejaz Chaudhry — 2018-06-01

Abstract

The huge fiscal deficit negatively affects economic growth in the long run consistent to results of Mohanty (2013). The findings coefficient of FD is -0.44 indicate that there is a negative and significant relationship between fiscal deficit and economic growth in the long run. Coefficient of DEXP is 0.71 and has a positive and significant impact, so that it will enhance the productivity of both human capital and physical capital, which increases economic growth. Fiscal deficit for capital expenditure is not a problem up to some threshold level. Auto Regressive Distributive Lag (ARDL) model, error correction model (ECM), impulse response function and variance decomposition are used for time-series data analysis. Interest payments have a negative and significant coefficient, which analysis the negative correlation between growth and interest payments. The lagged value of the error correction term is negative and significant. It is showing convergence from short-run disequilibrium towards the long-run equilibrium so, a short-run relationship also exists among variables of interest payments, fiscal deficit, development expenditure and economic growth.

Key Words: Fiscal deficit, Interest payments, Economic growth, Development expenditure

JEL classification: C87, E21, F65, H61, H62, P35.

Measuring efficiency Analysis: Islamic VS Commercial bank in Pakistan

Muhammad Atif — 2018-06-01

Abstract

This paper seeks to analyze efficiency of Islamic banking sector with conventional banking sector in Pakistan. For this purpose to represent Islamic banking sector, Meezan Bank Limited is selected, as the bank operates on the basis of Islamic banking system. While for conventional banking sector Habib Bank Limited is selected. To compare the performance and efficiency certain inputs and outputs have been selected. Assets, Employees and Branches have been taken as inputs while outputs are deposits held by these banks and profit after tax. Data Envelopment Analysis technique is used using TORA operation research software to analyze and interpret results. Conclusively it is noted that both banks are performing efficient with regard to available resources. Hence an increase in inputs will have positive impact on the outputs.

Key Words: Banking efficiency, Data envelopment analysis, Islamic banking system, conventional banking system.

Financial Development, Innovation, and Economic Growth: The Case of Selected Asian Countries

Abdul Rashid — 2018-06-01

We empirically examine the effect of financial sector development on economic growth by taking into account innovations for the sample of twelve Asian countries. We estimate panel data model by applying random effects estimator. We use balance panel data over the time period of 1995 to 2016. Our study provides significant evidence that in the presence of innovation, economic growth declines with financial development. However, innovation and financial development both are positively related to economic growth. Other variables namely the rate of inflation and the domestic saving to GDP ratio also appear significant in determining economic growth in the selected countries during the examined period.

Keywords: Economic Growth, Innovation, GDP, Domestic saving, Inflation, Panel data, Random effect model

Food Security Analysis in Pakistan: A Multi-Indicator Approach

Hafiz Asim — 2018-06-01

This study attempts to examine the food security situation in Pakistan. It examines the different dimensions of food security in Pakistan by analysing the underlying indicators developed by FAO. The study reveals that although the average food availability in terms of average calorie supply per capita in the country has increased from 1870 to 2450 during 1961-2013 but the average food deficit per person per day is still present in the country. Food security index shows that, despite the overall increase in food production or availability of food, the food security situation is deteriorating over time in Pakistan and it is a serious matter of concern for the policy makers to think about it. Although, agricultural production is increased but speed of this increment is slow as compare to the growth of population. Since, agricultural output is the only source of food supply. Hence, it is necessary to raise agricultural growth to make Pakistan as a food secure country. However, Government is continuously ignoring agricultural sector and resources are shifted to industrial and services sector in order to improve their performance. How the performance of these sectors affects the agricultural growth is an important question to analyse the future of food supply in the country.

Relationship between Capital Structure and Financial Performance of Textile Sector Companies

Muzaffar Asad — 2019-12-03

This study tests the relationship between capital structure and financial performance of the companies in the textile sector. In this study, correlation matrix and linear regression equation are used by ordinary least squares (OLS) to investigate the impact of capital structure and financial performance. Data has been collected from textile sector companies of the time frame 2011-2015 through respective annual reports and State Bank of Pakistan database. Debt to equity (DE) and debt to total funds (DTF) is used to represent the capital structure and return on capital employed (ROCE) shows the profitability of companies. Findings of the study show that DE positively influences ROCE of the companies. Furthermore, DTF also has a positive impact on ROCE. The relationship between capital structure and financial performance is significantly positive. Companies must undertake the optimal level of debt and equity ratio in their capital structure. This study is significant for the new and old textile companies operating under PSX to make optimal capital structure decision and to raise profitability.

Institutional Quality, Conflict and Aid Dependency

Unbreen Qayyum — 2019-12-03

This study attempts to explore the impact of foreign aid on the quality of governance while also taking into consideration the role of both internal and external conflict. Conflict does affect the governance directly by inducing instability and volatility in the economy, this precariousness gives rise to inauspicious climate that puts off the investment. Low level of investment and output will in turn decrease the required tax revenues or the available funds that can be used to improve the quality of governance. Conflict and foreign aid jointly determine the state of an economy and have a great impact on the institutional quality. Annual data from 1984 to 2010 have been used for the Asian developing economies, the results indicate that aid as well as both external or internal conflict have negative impact on the institutional quality and these results are robust for various alternative specifications.

Examining the Relationship between Literacy Rate and Poverty in Pakistan

Ezzah Batul — 2019-12-03

Education plays an important role to pave way towards economic growth. Investment in education enhances the living standards and it is necessary for economic growth and social well-being of a society. This study forecasted the education status and its impact on economic growth by taking data from 1971 to 2016 in Pakistan. Secondary data were taken from International Finance Statistics and World Bank Development Indicators. The variables included in the research were poverty, Education status, and Economic growth. Time series analysis was carried out on the data. The empirical methodology adopted for this purpose includes the use of Augmented Dickey Fuller test, WALD test, Johanson cointegration test, and VECM test. The study found long-run relationship between economic growth and the education status when poverty serves as dependent variable measuring economic growth in case of Pakistan. This showed that education does affect economic growth in the long run but not in short run. The interdependency between the variables suggested that policies should be formulated that would have a long lasting positive impact on the education status of the population and the continuity of the policies to achieve its objectives is more essential.

Economic Empowerment through Human Capital, Social Development and Poverty Control Strategies - A Case Study of Bagh District (AJ&K)

Sarooj Noor — 2017-01-01

It is found that human capital is necessary to gain sustainable growth.
Their practical implementation can effectively alleviate poverty, especially in
Rural Areas of Azad Jammu and Kashmir. This paper proceeds to examine the
role of human capital and social development in achieving sustainable growth &
lessening poverty. By providing sufficient infrastructure, training and knowledge,
sustainable growth can be achieved. A case study is added to show the example
of human capital in achieving sustainable growth and development. Approaches
to poverty reduction are also included.

Multiple Indicators Hamdani Formula for HEC Journal Recognition and Ranking Reply to debate article of the Editor KER, Vol. 25, No. 1

Atiq-ur-Rehman — 2017-01-01

ince last two years, Dr. Syed Nisar Hamdani along with a team of academicians
is working on a new multiple indicators formula for recognition and ranking of
academic journals by Higher Education Commission. This article comments on
the debate article published in KER Vol. 25, No.1, 2016 and extends the debate
about why the newly proposed formula is needed for recognition of economics or
social science journals and how far it is different from the existing formula of
journal recognition by Higher Education Commission of Pakistan.

The Role of Religiosity in Analyzing Households’ Willingness to Pay for Water

Muhammad Attique Farrukh — 2017-01-01

This paper analyzes how religious beliefs affect willingness to pay (WTP)
for water, apart from the conventional factors identified in the literature. The
motivations behind this exploration are multiple. Firstly, the recently presented
Divine Capital Model (Hamdani, 2012) 14 claimed that the Divinely attributes
such as spirituality, religiosity, ethics and reinforcing infrastructures
significantly affect the human decisions for time and resource allocation.
Secondly, a preliminary evidence (Attique, 2013) shows that religious beliefs and
attitudes15 have a stronger influence on households’ WTP for water. Using the
Divine Capital Model, the present study modeled the WTP for water to see the
effect of economic and non-economic factors.
The study is based on data from 245 households in District Rawalakot in
the state of Azad Jammu and Kashmir Pakistan, where availability of water and
access to improved and better water system is an issue. The empirical analysis is
carried out using the Ordinary Least Square (OLS) method of estimation. The
findings indicate that religious variables, i.e. prayers, belief, practices have a
significant effect on the sample households’ WTP for water. The results of the
study also reveal that households with a higher expenditure are willing to pay
more for an improved and better water system. This finding is consistent with the
environmental economic theory which stipulates that demand for improved
environmental quality increases with income. Education level of head of
household is positively influencing WTP for water, which stems from the fact that
educated people are more willing to pay for improvements in water quality
because they can value it. These findings have many implications; there is a scope to improve water services in view of the Divinely attributes of people,
government can enhance people’s participation in water improvement schemes
through Religious motivation of people.

Social Capital Based Social Protection through Philanthropic Organization

Syed Akhter Husain Shah — 2017-01-01

Social protection is a preventive, remedial and supporting mechanism against
social risks, losses, un-employment, crimes, diseases, death etc. Social Protection
may be provided through different strategies, policies and activities for reduction
of un-employment, disease, and risk to health, disability, crimes and social
threats. This paper discus the existing gaps in social protection to individuals,
groups and their dependents. It mainly focuses on three types of social protection
gaps Shah (2013). These social protection gaps are filled through different
organizations such as; Government, international, non-governmental, religious,
social and philanthropic. The paper identifies the role and contribution of the
philanthropic organizations in social protection of individuals, groups,
community etc. The philanthropic organizations directly or indirectly contribute
to social protection in different parts of the country. This paper gives analysis by
incorporating role and contribution of philanthropic organizations. The role of
philanthropic organizations in social protection through partnership with state
may be more efficient and sustainable in society.

Equalization of Returns to Education in Pakistan: A Dynamical District-Level Analysis

Muhammad Nauman Malik — 2017-01-01

This study intends to seek the dynamical change (convergence/divergence) in
returns to education at district level using Pakistan Social and Living Standard
Measurement (PSLM) data (2004-05 to 2012-13) in Pakistan. This study finds
out that the supply and demand forces are not working symmetrically for all
districts of the country which is against the ideals of inclusiveness. Convergence
phenomenon is being observed only for the districts of Punjab province. It shows
that institutional mechanisms in deprived provinces are performing poor in the
context of symmetric management of supply and demand of educated labor force.

Inequality, Financial Development and Government in Low-Income Developing Countries

Dr M Tariq Majeed — 2017-01-01

The purpose of this study is to examine the impact of financial and economic development on cross-country income inequality using a panel data set from 50 low-income developing counties over a long period, 1970-2008. The results show that financial development helps in reducing inequalities, but a non-monotonic relationship between financial development and inequality does not hold. The study, however, finds a non-monotonic relationship between inequality and the level of economic development, which supports Kuznet's inverted-U hypothesis. The government emerges as a major player in reducing income inequalities as its role is significant in all models. The study suggests that the policy makers must focus primarily on economic development to reduce inequalities. Since financial development, irrespective of its level, also reduces inequalities, policy makers also need to encourage financial reforms.

THE IMPACT OF RELIGIOUS HUMAN CAPITAL ON INDIVIDUAL’S WELL BEING IN PAKISTAN

Fozia Munir — 2017-01-01

The major objective of the study is to examine the effects of religious
capital on individuals’ wellbeing. In received literature on the subject
various factors have been investigated that affecting wellbeing this study
attempt to check out weather religious human capital can affect
wellbeing/self-satisfaction. We used the data set of Divine economic
survey’s 2009 is based on 807 households for this study. Our Wellbeing
index takes values from zero to 100, i.e. it is actually summation of
responses against a number of questions. In order to check the effect of
religious capital on individual’s wellbeing we used Cronbach Alpha test
for reliability of the questionnaire, descriptive analysis and OLS technique
for results. In the empirical analysis it is found that religious capital like
worship, religious education, time allocation for religious activities and
interaction with religious fellows, charity etc. have positive effect on
individual’s” wellbeing.
Keywords: Worship, Wellbeing, Religious capital, Divine Economics.

RELEVANCE OF LIFE-CYCLE HYPOTHESIS FOR LOW-INCOME COUNTRY: AN EMPIRICAL INVESTIGATION FROM PAKISTAN

Syed Ammad — 2017-01-01

This study investigates the nexus between wealth and aggregate
consumption, under the lifecycle hypothesis. The study covers annual
time-series data from 1973 to 2015 where dynamic-OLS (DOLS) is
applied for estimating this nexus for Pakistan. However in order to check
the robustness Ridge regression is also applied, which endorse the finding
of original estimates. The study results show that MPC out of income is
ranges from 0.55 to 0.59, while the wealth coefficient is insignificant with
negative sign. Further the age-structure variables i.e. overall dependency
and working age dependency ratio both have negative effect on
consumption. The overall results refuted the lifecycle conjecture in case of
Pakistan, as the wealth has in-significant effect on consumption and
dependency ratios have contradictory sign against the lifecycle assertions.
The non-existence of lifecycle hypothesis may be, plausibly, due to some
distinctive feature of Pakistani society. Such as, the significant negative
sign of dependency ratio support our social behavior where old-age
people sacrifice their consumption for younger and another motive is
bequest which certainly dominates in Pakistani society.
JEL Classification: D10; D12; E21.
Keywords: Aggregate Consumption; Wealth; Lifecycle Hypothesis;
Pakistan

A STUDY ON VALUE RELEVANCE OF CORPORATE GOVERNANCE DISCLOSURE: EVIDENCE FROM PAKISTAN STOCK EXCHANGE

Huma Fatima Fatima — 2017-01-01

This paper focus on the reform process taking place in Pakistan
related to disclosures of financial information in annual reports at the
same time changes in regulatory framework related to corporate
governance. For this purpose, data of fifty companies listed on Pakistan
Stock Exchange is used for the time period 2010-2013 by applying panel
regression. Corporate governance disclosure index is adopted to
empirically analyze the impact of corporate governance disclosures on the
value relevance of firm. Results of panel regression show that overall
corporate governance disclosure have positive and significant impact on
firm value, whereas from results of sub-indices ownership structure
disclosure is more relevant for investors as compared to other two subindices: board and management structures disclosure and financial
information disclosure. Further, results show that control variables
liquidity, profitability and firm size have positive impact on firm value.
Keywords: Corporate Governance, Value Relevance, Pakistan Stock
Exchange, Corporate Governance Disclosure, panel data.
Article classification: Research paper
JEL Classification: G32, G34, G39

ROLE OF SOCIOECONOMIC FACTORS IN POVERTY ALLEVIATION: AN ASSESSMENT OF URBAN INFORMAL SECTOR

Muhammad Ayyoub — 2017-01-01

Increasing poverty has featured prominently in the policymaking
landscape of Pakistan for several decades now. We address this issue and
shed light on one of the links that contribute towards generating income
and alleviating poverty in urban Pakistan. In doing so, we utilize primary
data from the most urbanized district of Punjab (i.e., Lahore). In 2015, we
conducted a household survey from 184 informal sector workers to
examine how possibly the informal sector can contribute towards
employment creation and poverty mitigation. By analyzing the data
through the Probit model, results show that education and presence of
assets are still top remedies to alleviate the poverty of informal sector
workers.
Keywords: Human development; Informal sector; Pakistan; Poverty
alleviation; Probittechnique.
JEL Classification: J46, O17

EFFECT OF PARENTAL SOCIOECONOMIC STATUS ON ACADEMIC ACHIEVEMENT OF SECONDARY SCHOOL STUDENTS

Syed Afzal Shah — 2017-01-01

This study aimed at exploring the role of parental socioeconomic
status on academic achievement of secondary school students. The
objectives of the study were; to explore different levels of parental
socioeconomic status of students, to find out the effect of different aspects
of parental socioeconomic status viz. parental education, parental
occupation, parental income, parental living, parental relation, and family
system on academic achievement of secondary school students, and to
compare the availability of facilities for male and female students in the
target population. For this, 1438 students were randomly selected from 84
schools of Abbottabad, Haripur and Mansehra, of Hazara Division,
Khyber Pakhtunkhwa through stratified random sampling technique. The
data was collected through a pre-framed questionnaire about the socioeconomic status of the students validated by experts whereas marks
obtained in Grade 9 were taken as Students’ academic achievement. The
collected data was analyzed by using percentage, Multiple Regression
Model and student T- test. The Results indicated that parental profession,
parental education, parental income, alive of both mothers and fathers, as
well as availability of facilities significantly contributed towards
improving the academic achievement of their children at secondary level.
Additionally, boys are more facilitated and compared to girls.
Keywords: Academic Achievement, Parental Education, Parental income,
Socio-economic status

E-GOVERNMENT AND ECONOMIC GROWTH: A PANEL DATA ANALYSIS

Tariq Majeed — 2017-01-01

In recent years, the rising importance of e-government has gained
the attention of researchers and policy makers. The strategic objective of
e-government in a society is to facilitate the efficient provision of services
to its citizens. The purpose of this study is to explore e-government and
economic growth nexus, by employing large panel data of 154 countries
across the world from 2003 to 2010. The results reveal that e-government
is an important tool that drives economic growth of a country. The
empirical findings of random and fixed effects model show that
implementation of e-government causes high per capita GDP. The
dynamic panel data model by dealing with the problem of endogeneity
also confirms the validity of the results of FEM and REM. The main
findings are robust to control variables and different econometric
techniques.

JEL Classification: C23; H1; J24; O40